Transcript The University of Texas at San Antonio FY 08 Annual Financial Report Highlights January, 2009

The University of Texas at
San Antonio
FY 08 Annual Financial Report
Highlights
January, 2009
Annual Financial Report
Highlights
The Annual Financial Report (AFR) is made up of three primary
statements with many supporting schedules.
1. Balance Sheet – Explains what we own, our obligations and
what is available.
2. Statement of Revenues, Expenses and Changes in Net Assets
(SRECNA) – Shows the results of operations for the year.
3. Statement of Cash Flows – Shows what revenue came in,
what was expended and what is left.
Review pie charts and ratios that help explain our financial condition
2
UTSA FY 08
Balance Sheet
The University of Texas at San Antonio –
Balance Sheet
($ in millions)
The Balance Sheet has three sections:
Assets: What we own - Items that are available to
meet operating costs of the Institution, plus
buildings, land, equipment, etc.

Investments increased by $37.8M due to
additions and investment income.

Capital Assets increased by $79.1M
predominantly due to the construction of
Engineering Building, Laurel Village, Thermal
Energy Plant, and University Center III.
Liabilities: Our obligations -Amounts due and payable
within one year or beyond.
Net Assets: What’s available - Capital Assets net of
depreciation, endowment funds and other
unrestricted funds.


Amount invested in Capital Assets increased
predominately by $79.1M due to construction.
Unrestricted Net Assets grew by $18.2M due to
increase in Tuition & Fees and a delay in
implementing key strategic initiatives.
%
Variance Change
3.2
2%
ASSETS:
Current Assets
2008
161.8
2007
158.6
Noncurrent Assets
231.2
193.4
37.8
20%
Other Noncurrent
Assets
Capital Assets, net
4.3
2.4
1.9
79%
629.4
550.3
79.1
14%
1,026.7
904.7
122.3
14%
153.7
2.3
141.1
2.3
12.6
0.0
9%
0%
156.0
143.4
12.6
9%
629.4
550.3
79.1
14%
89.6
77.5
12.1
16%
151.7
870.7
133.5
761.3
18.2
109.4
14%
14%
Total Assets
LIABILITIES:
Current Liabilities
Noncurrent
Liabilities
Total Liabilities
NET ASSETS:
Invested in Capital
Assets, Net of
Related Debt
Restricted
Unrestricted
Net Assets
The Statement of Revenue, Expenses, and
UTSA Operating Revenues ($ in millions)
Changes in Net Assets (SRECNA) . This
Student Tuition and Fees - Net of Discounts
statement is called the “Operating Statement” Sponsored Programs
as it reports the results of operations for the Sales and Services of Educational Activities
year.
Auxiliary Enterprises


Tuition and Fees increased by $4.6M (3%).
Sponsored Programs increased by $6.9M (9%) due
to Texas Grant Pass through funding.
Operating Loss is calculated before State
Appropriations. Operating expenses outpaced
operating revenues causing an increase of $17.2M
(23%).
Other
2008
2007
148.1
143.5
779.7
72.8
7.7
6.7
15.1
17.9
Total Operating Expenses
Operating Loss
(75.0)
(92.2)
(75.0)
114.7
98.1
5.8
3.8
12.9
10.9
98.1
97.
13.8
3.5
10.8
6.1
(13.8)
12.4
12.4
4.1
State Appropriations
Gift Contributions

Income Before Other Revenues decreased by
$22.7M (45%) due to a $13.8M Net Decrease in FV
of Investments and an increase in Operating Loss.
Gain/(Loss)
onBefore
State of
Capital
Assets
(0.1)
Income
(Loss)
Other
Revenues,
27.4
Other Nonoperatin
Revenues/Expenses
0.0
Expenses,
Gains or Losses
g
Income
(Loss)
Before
Other
Revenues,
Expenses,
Gains
Gifts and Sponsored Programs
.5
or Losses
50.1
Additions to Permanent Endowments
4.4
Gifts and Sponsored Programs
0.0
Reclass From (To) Other Institutions
97.8
Additions to Permanent Endowments
4.0
Mandatory
Transfers
(28.3)
Reclass From (To) Other Institutions
(48.7)
As on the previous exhibit, Change in Net Assets
was $109.4M. This is predominately due to debt
issued for construction projects for which bond
proceeds are due from System.
293.8
315.6
Nonoperating Revenues (Expenses):
Net Investment Income (Loss)
Net Inc. (Dec.) in Fair Value of Investments

15.
14.
22.5
1
3.2
215.3
240.6
Total Operating Revenues
State Appropriations increased by $16.6M (17%).
Mandatory Transfers represent amounts transferred
to System to pay debt service and Nonmandatory
Transfers represent anticipated bond proceeds
transferred to UTSA to fund construction projects.
72.
73.
26.7
8
6.0
2.5
3.1
240.6
256.5
348.7
315.6


2007
2006
143.5
118.7
Mandatory Transfers
- Comp & Sys
-Debt Svc 9.1
(19.7)
Nonmandatory
Transfers
Admin
Nonmandatory
Transfers
- Comp
& Sys Admin
141.9
Transfers
From (To)
Other State
entities
(1.5)
50.1
0.0
0.0
32.
4.0
20.6
(48.7)
4.9
(19.7)
19.8
(1.4)
(16.6)
141.9
28.
(1.4)
6
Change in
in Net
Net Assets
Assets
Change
Net Assets, Beginning of the Year
Net Assets, Beginning of the Year
126.2
109.4
635.1
761.3
68.
126.2
7
566.4
635.1
Net Assets, End of the Year
870.7
761.3
761.3
635.1
Transfers From (To) Other State entities
4
The University of Texas at San Antonio
FY 08 – Statement of Cash Flows





Cash from operations includes tuition
and fees and expenditures for
operations includes salaries,
scholarship/fellowship and supplies.
($ in millions)
Cash Flows
2008
2007
Cash received from operations
277.7
262.0
Cash expended for operations
(337.1)
(301.1)
Net cash used in operating activities
(59.4)
(39.1)
Net cash used by noncapital financing
activities
111.3
105.8
Investing Activities include the
purchase/sale of investments,
interest income and endowment
income distribution.
Net cash used by capital and related
financing activities
(26.3)
(38.4)
Net cash used by investing activities
(38.8)
(30.2)
Cash & Cash Equivalents decreased
by $13.2M due to increased
spending for operations.
Net decrease in cash and cash
equivalents
(13.2)
(1.9)
Cash and cash equivalents, beginning of
the year
77.8
79.7
Cash and cash equivalents, end of year
64.6
77.8
Noncapital financing activities
include State appropriations and
Gifts.
Capital and related financing
activities include purchase of
equipment and construction of
buildings.
5
UTSA FY 2008 Sources of Revenue by
Category
Operating Sources by Category
($ in Millions)
Federal Government
$64.5
17%
Institutional Resources
$51.4
13%
State of Texas
$126.2
32%
Student & Parent
$148.1
38%
6
UTSA FY 08 Sources of Revenue
Operating Sources
Sales & Services
$7.7
2%
Private Gifts &
Grants
$8.8
2%
($ in Millions)
Net Auxiliary
Enterprises
$17.9
5%
Local Government
Grants
$0.7
0%
Endowment &
Interest Income
$12.9
3%
Federal Grants &
Contracts
$64.5
17%
Other Income
$3.4
1%
State
Appropriations
$111.7
28%
State Grants &
Contracts
$11.5
3%
Research
Development Funds
$3.0
1%
Tuition & Fees
$148.1
38%
7
UTSA FY 08 Uses of Funds
Operating Uses
Academic Support
$28.7
9%
($ in Millions)
Student Services
$28.9
9%
Public Service
$16.6
5%
Research
$26.8
8%
Instruction
$106.8
31%
Institutional Support
$31.5
10%
Operations &
Maintenance of
Plant
$37.8
11%
Scholarships &
Fellowships
$24.9
8%
Capital Outlay
$8.9
3%
Auxiliary
Enterprises
$20.5
6%
8
UTSA FY 08 Analysis of Financial Condition
Composite Financial Index



Composite Financial Index
measures the overall financial
health by combining four core
ratios into a single score: primary
reserve ratio, expendable
resources to debt ratio, return on
net assets ratio and the annual
operating margin ratio.
The CFI decreased by .9
primarily due to decrease in the
fair value of investments of
$13.8M, as well as $69.2M
increase in the amount of debt
outstanding.
6.0
4.0
3.1
4.4
3.7
3.6
2005
2006
3.5
2.0
0.0
2004
2007
2008
System’s benchmark is 3.0 or
greater.
9
UTSA FY 08 Analysis of Financial Condition
Operating Expense Coverage Ratio

Measures an institution’s ability
to cover future operating
expenses with available year-end
balances. Ratio is expressed in
number of months coverage.
6.0
5.0
5.0

Increase slightly from 5.0 months
to 5.1 months is due to increase
in unrestricted net assets as a
result of increases in Tuition &
Fees attributable to rate
increases. In addition, a delay in
implementing several key
initiatives.
4.2
3.6
4.0
3.0
3.0
2.0
1.0
0.0
2004

5.1
2005
2006
2007
2008
System satisfactory rating is at
two months or above and should
be stable or improve.
10
UTSA FY 08 Analysis of Financial Condition
Debt Service Coverage Ratio

This ratio measures the actual
margin of protection provided to
investors by annual operations.
Calculation is used by Moody’s
Investment Services, system-wide to
determine bond rating. This is
watched very closely so UT System
can maintain AAA bond rating.
4.0
2.9
3.0
3.1
3.0
2.4
2.2

Trend helps to determine if an
institution has assumed more debt
than it can afford to service.
2.0
1.0

The debt service coverage declined
but still exceeds UT System’s
benchmark of greater than 1.8. This
means that our net resources are 2.4
times what we are currently
expending for debt payments. The
ratio decreased as a result of a
reduction in operating performance
and an increase in debt service.
0.0
2004
2005
2006
2007
2008
11
UTSA FY 08 Analysis of Financial Condition
Expendable Resources to Debt Ratio

This ratio measures an
institution’s ability to fund
outstanding debt with existing net
asset balances should an
emergency occur.
0.8
0.7
0.7
0.7
0.7
0.6

UTSA’s debt ratio changed
slightly due to a increase in debt
associated with Engineering
Building, Laurel Village and
University Center III.
0.6
0.4
Restated
Restated
0.2
0.0

This ratio shows that more and
more of our resources are going
towards paying off debt.
System’s Satisfactory benchmark
is 0.8x or greater.
2004
2005
2006
2007*
2008
12
UTSA FY08 Analysis of Financial Condition
Debt Burden Ratio

This ratio examines the institution’s
dependence on borrowed funds and
cost of borrowing relative to overall
expenses.
10.0%
8.5%
8.0%


UTSA’s debt burden ratio increased
dramatically as a result of a major
capital improvements program
resulting in increased debt service
payments. The institution is heavily
reliant on debt to fund cost.
System’s Satisfactory benchmark is
less than 5.0%.
6.2%
6.0%
5.7%
5.9%
2005
2006
6.6%
4.0%
2.0%
0.0%
2004
2007
2008
13
UTSA FY 08 AFR Summary

UTSA continues to receive a “Satisfactory” rating from
UT System as a result of a healthy financial condition.

UTSA’s operating margin ratio of 7.3% is high but we
expect it to trend downward. Future expenditures are
expected to exceed revenue growth as strategic
initiatives are implemented, new positions are hired,
equipment is replaced and planned capital renovations
are completed. The university must establish an
appropriate level of reserves and closely monitor its
debt capacity.
14